Credit cards are rapidly replacing cash in these modern times. With the help of a piece of plastic, you can make as many purchases as you want, always within your credit limit and without having to carry large amounts of cash. This should not only save you money, but it should also keep you safe and free from the clutches of thieves who could empty out your bulging wallet.
These promises, however, are not easily fulfilled when you finally have a credit card. Credit cards can give the illusion that no cash is being spent until the credit card bill arrives at the end of the billing period, when the maximum restraint on splurge will have been too late. Additionally, credit card thieves are finding more and more ways to circumvent tight bank security measures and are able to use a credit card in the name of many poor victims.
This is why credit card companies are now stricter when they receive credit card applications. Bad credit on previous cards is now automatically counted as a reason for rejection of an application. This is difficult for people who represent companies, who need credit cards to make hotel reservations, rent cars and book domestic and international flight tickets at the last minute. Credit cards are also required to order online or by phone.
Prepaid credit cards provide an alternative to all those who need a credit card. They work very similar to debit cards; that is, an account is created through a monetary deposit, and this deposited money can be used through the issued prepaid credit card. The biggest advantage of prepaid credit cards is that you have the right to spend only what you have in your account; therefore, you will not have debts or bills to pay.
However, one downside to prepaid credit cards is that most prepaid credit card companies require a setup fee to open and maintain a prepaid credit card account. You’ll need to pay taxes on your cash deposits, and you may have to pay an annual membership fee, just like you would with a regular credit card.
Another big disadvantage is that most online merchants do not accept prepaid credit cards as a form of payment. This is because they have no guarantee that the account can fully cover the payment for an online purchase. This can be difficult for prepaid credit card holders to pay for monthly subscriptions to Internet service providers or to purchase items that are sold at zero percent interest, with a certain amount deducted from the credit card in periods of fixed time.
If you are interested in buying and using a prepaid credit card, take note of these advantages and disadvantages. Although you have the convenience of not carrying cash, you may not be able to buy as many items as you want or from as many merchants as you want. While you may have to pay additional fees on your own, you can control your overhead and stay debt free.